Datadog Net Income Triples To $118.3 Million On 35% Revenue Growth, But Its Fourth-Quarter Outlook Is Flat
Datadog guided fourth-quarter revenue to $1.19 billion to $1.20 billion, level with the $1.20 billion it just reported.
Datadog, which sells cloud software that monitors and secures the applications and systems companies run in the cloud, said third-quarter revenue rose 35% from a year earlier to $1.20 billion, in results released Wednesday. Net income climbed to $118.3 million from $33.9 million, yet the company guided fourth-quarter revenue to between $1.19 billion and $1.20 billion, about where it landed this quarter.
Profit and cash flow widen
Net income came to $0.32 per diluted share by standard accounting, against $0.10 a year earlier. On an adjusted basis, earnings were $0.81 per share, up from $0.55.
Operating income by standard accounting was $75 million, a 6% margin, against a small loss in the year-earlier quarter. Adjusted operating income was $334 million, a 28% margin, up from 23%. Stock-based compensation of $237 million is the largest item separating the two measures.
Operating cash flow was $290 million and free cash flow $251 million. Cash and marketable securities stood at $5.2 billion as of September 30.
"Datadog delivered a strong third quarter," CEO Olivier Pomel said, pointing to the 35% growth and the cash flow figures.
Bigger customers and a first in-house AI model
Datadog's platform covers infrastructure monitoring, application performance monitoring, log management, cloud security and more, and customers often start with one product and add others. As of December 31, 2025, it had approximately 32,700 customers, according to its annual report.
The number paying at least $100,000 in annual recurring revenue rose 20% to about 4,860 as of September 30, from about 4,060 a year earlier.
The company also introduced Scout 1.0, the first specialized model from its AI research team. Scout, in preview, now powers its Bits Investigation tool and reaches frontier-model performance at a fraction of the inference cost, the company said.
A fourth quarter that matches the third
For the fourth quarter, Datadog expects adjusted operating income of $280 million to $290 million and adjusted earnings of $0.69 to $0.71 per share. Full-year revenue is guided to $4.515 billion to $4.525 billion, with adjusted operating income of $1.095 billion to $1.105 billion.
Management holds its earnings call at 8:00 a.m. ET Wednesday, where the outlook is likely to come up.
Full-year adjusted earnings are guided to $2.73 to $2.75 per share, on about 375 million diluted shares.
Sources
- 8-K Filing — Datadog, Inc. (DDOG) — SEC EDGAR
- Exhibit ex-991x20260930x8k.htm — Datadog, Inc. 8-K exhibit — SEC EDGAR
